You are the Treasurer of the Bohemian Rhapsody Music Company (BRM), an Indiana-based accordian manufacturer.You have just made a huge sale to a German Polka Festival company of EUR 2.5M worth of instruments

You are the Treasurer of the Bohemian Rhapsody Music Company (BRM), an Indiana-based accordian manufacturer.You have just made a huge sale to a German Polka Festival company of EUR 2.5M worth of instruments.This money will be paid in EUR in 90 days and you are worried about the FX risk related to this transaction.Given the information below, please determine what your choices are for managing this risk, be sure to consider all the ways.You can use a 360-day year basis, and determine the value on day 90 (when the payment will occur)Just use the rates provided, don’t worry about the bid/ask spread for this problem.Sale Price2,500,000SpotEUR/USD1.0875Forward (90 day)EUR/USD1.0772Forecasted RateEUR/USD1.0735in 90 daysCost of Capital10%BorrowInvestUS Rates4.0%2.0%EUR Rates7.0%5.0%Put Option Available @ 1.075 for a 1.25% premium1.0751.25%

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